Our guest post today comes from Prof. Matt Liotine in the Dept. of Information and Decision Sciences, University of Illinois-Chicago. Jay and I had the privilege of lecturing in his MBA classes during the POMS Meeting in Chicago in April.
Supply chain resilience has taken center stage in recent years amidst the many adverse events that are taking place across the globe. We have seen first hand how tsunami, earthquakes, hurricanes, tornadoes, wildfires, volcanoes and other natural disasters can not only cause loss of life and asset damage, but can also disrupt business operations. While is it incumbent upon companies to establish business continuity and disaster recovery plans to continue their operations in light of such events, it is also necessary for them to evaluate or even audit such plans pertaining to their key suppliers.
Several standards have been issued across the globe that businesses can use in this regard, such as ISO 22301, BS 25999 (U.K.), and NFPA 1600 (U.S.), and ASIS SPC.1. Most recently, the U.S. Congress has mandated a voluntary program of accreditation and certification of private entities for business continuity. Called the Voluntary Private Sector Preparedness Accreditation and Certification Program (PS‑Prep), this initiative was an outgrowth of the 9/11 Commission Act of 2007. Companies can use any of the last three standards cited above as a compliance benchmark since these share many similar principles and characteristics. Compliance is evaluated by auditors representing a PS-Prep certifying body. The U.S. Department of Homeland Security has authorized that these bodies be accredited by the ANSI-ASQ National Accreditation Board. While totally voluntary, PS-Prep can provide a mechanism for companies to evaluate and certify their own business continuance as well as that of their suppliers. (AT&T has been the first company to become PS-Prep certified.)
It is important to note that such compliance is not only targeted towards large corporations, but also for small-to-mid size businesses, which in fact constitute a significant portion of the global supply chain. While it may be infeasible for smaller suppliers to acquire a certification, buyers can still encourage or even enforce good business continuance practices by their suppliers through either contract stipulations and/or business processes.